RWA (Real World Assets)
Physical or traditional financial assets — such as real estate, government bonds, commodities, private credit, and equities — that have been tokenized and brought on-chain as blockchain tokens. RWA tokenization aims to make traditionally illiquid or access-restricted assets tradeable, fractionally ownable, and composable with DeFi protocols. It is viewed as one of the largest growth opportunities for bridging traditional finance with blockchain.
“Ondo Finance tokenizes US Treasury bills as on-chain tokens, allowing DeFi users to earn Treasury yields without leaving the blockchain ecosystem. MakerDAO has allocated billions in DAI backing to RWA collateral.”
Token
A digital asset created on an existing blockchain rather than its own native chain. Tokens can represent a wide range of assets and utilities — from currency and governance rights to real-world assets and collectibles. Unlike coins (BTC, ETH) which are native to their blockchain, tokens are created using smart contracts on platforms like Ethereum (ERC-20, ERC-721).
Security Token
A blockchain token that represents ownership in a regulated financial asset — such as equity in a company, a debt instrument, real estate, or a fund — and is subject to securities laws in the issuing jurisdiction. Security tokens must comply with regulations like SEC's Regulation D or Regulation S, including investor accreditation, transfer restrictions, and reporting requirements.
DeFi (Decentralized Finance)
An ecosystem of financial services built on blockchain networks that operate without traditional intermediaries like banks, brokerages, or insurance companies. DeFi uses smart contracts to provide lending, borrowing, trading, insurance, derivatives, and yield generation in a permissionless, transparent, and composable manner. Anyone with a wallet can participate.
Compliance
The adherence to regulatory requirements governing cryptocurrency businesses, including Anti-Money Laundering (AML) rules, Know Your Customer (KYC) procedures, securities laws, tax reporting obligations, and sanctions screening. Regulatory frameworks vary significantly by jurisdiction and are rapidly evolving. DeFi's permissionless nature creates unique compliance challenges compared to traditional finance.